Question

If your marginal propensity to consume is 0. 4 and you get an additional $300 in income, you would spend ________ on consumption.

Answer 1

$120

Step-by-step explanation:

.4 x 300 = $120

the MPC (Marginal propensity to consume) is essentially the same as saying this is how much of your additional income to spend. In this case, you spend .4 of your additional income. Multiplying .4 by $300 in additional income results in $120